Following the Autumn Budget 2026, we now have the full details of the government's Your First Home Scheme, including the complete list of local authority property price caps. It's welcome news for aspiring homeowners looking to take their first step onto the property ladder. But how does the scheme actually work, who can benefit and what could it mean for your finances? Here's everything you need to know.
Your First Home is a government scheme designed to help first-time buyers purchase a new-build home in England with a smaller deposit and mortgage. If saving for a deposit or securing a large enough mortgage has been holding you back from buying your first home, this scheme could offer a helping hand.
To qualify, buyers will need to meet the following criteria:
Further information about eligibility will be made available before applications for the scheme open, so it's worth keeping an eye out for the latest updates.
If you're eligible, the Your First Home Scheme will allow you to purchase a new-build property using three key elements:
Importantly, once your purchase is complete, the home will belong to you. The government won't become a joint owner or landlord of your property.
But what could this actually look like when buying a home? Let's break down the figures using a real-world example.
Imagine you've found your ideal new-build home in Manchester, with a housebuilder participating in the scheme. The local authority price cap for this area is £355,000, and the property you've set your heart on is priced at £340,000. As it's below the price cap, it would qualify for the scheme.
Here's how the purchase price of £340,000 would be broken down:
Your deposit (2.5%): £8,500
Government equity loan (interest-free for 5 years): £68,000
Repayment mortgage: £263,500
TOTAL PURCHASE PRICE: £340,000
Now, let's compare that with buying the same property without the Your First Home Scheme. With a standard 95% mortgage, you'd need to find a deposit of £17,000 and secure a mortgage of £323,000.
That's an additional £8,500 needed for your deposit alone. For first-time buyers struggling to save while managing everyday living costs, that difference could make a significant impact.
As appealing as the scheme sounds, it's important to do your homework before deciding whether the Your First Home Scheme is the right option for you. Like any property purchase, you'll need to consider the costs, eligibility requirements and whether the scheme works for your personal circumstances.
First, check whether the new-build properties in your preferred area fall within the relevant local authority price caps. In areas where property prices are particularly high, the limits may mean there are fewer developments or properties to choose from.
You can find the full list of local authority price caps here. These limits have been designed to help the scheme support access to more modestly priced homes, while taking into account the differences in property prices across England.
You'll also need to think carefully about the ongoing repayment costs. These will depend on the property you purchase, your mortgage interest rate and your individual financial circumstances.
Although the government's equity loan will be interest-free for the first five years, charges will apply after this period. The planned interest rates are:
Years 1 to 5: 0%
Year 6: 1.5%
Year 7 onwards: 3%
To give you a better idea of what this could mean for your monthly outgoings, let's return to our Manchester property example and look at some estimated costs.
For this illustration, we'll assume:
Property price: £340,000
Repayment mortgage term: 30 years
Mortgage interest rate: 5%
Scheme equity loan: £68,000
Your deposit: 2.5%
During the first five years, while the government equity loan remains interest-free, your estimated total monthly cost will be £1,415.
In year six, when interest payments on the equity loan begin, your estimated monthly cost will increase to £1,500.
From year seven onwards, your estimated monthly cost will rise to £1,585.
For comparison, purchasing the same property with a standard 95% mortgage and a 5% deposit would result in estimated monthly repayments of £1,734.
Of course, these figures are intended as a guide and are only rough estimates. They don't include mortgage fees or other potential costs associated with buying and owning a home. Remember to factor in things such as service charges, estate charges, buildings insurance, council tax and ongoing maintenance when working out what you can comfortably afford.
There's another important detail to understand before signing up to the scheme: the government equity loan is linked to the value of your property. This means the amount you'll eventually need to repay could increase or decrease depending on how much your home is worth when you repay the loan.
In most cases, you'll repay the equity loan when you sell your property. However, there will also be an opportunity to repay some or all of the loan before selling. Further guidance on how repayments will work is expected before applications officially open.
Essentially, if your government equity loan represented 20% of your property's purchase price when you bought it, you'll generally need to repay 20% of its value when settling the loan. The property's value will be established through an independent valuation.
Let's look at what this could mean using our Manchester example.
You purchased your new-build home for £340,000 and received a 20% government equity loan worth £68,000.
Some years later, your property is independently valued at £360,000. That's an increase in value of £20,000.
As the equity loan represents 20% of your home's value, the amount you'll need to repay would now be £72,000. That's £4,000 more than the original loan amount.
But what happens if your property decreases in value instead? Let's look at another example.
You purchased your new-build home for £340,000 and received a 20% government equity loan worth £68,000.
This time, your property is valued at £300,000, representing a decrease in value of £40,000.
Using the same 20% calculation, the amount you'd need to repay would be £60,000. That's £8,000 less than the original loan amount.
As of 6th November 2026, applications for the Your First Home Scheme are not yet open. However, the government has confirmed that customer pre-registration is expected to begin before the end of the year.
Pre-registering won't commit you to buying a property through the scheme. Instead, it will give you access to further information about eligibility and the price caps that apply in your chosen area, helping you understand whether you could benefit.
The first customer applications are expected to be accepted in February 2027, with the initial property sales under the scheme planned for April 2027.
If you're thinking about taking advantage of the Your First Home Scheme, now could be a great time to start exploring the new-build homes available in your area. Get a feel for what's out there, compare developments and think about the type of property that could be right for you.
Just remember to check with your chosen housebuilder that they're registered to participate in the scheme and confirm which developments and individual plots are included.
Ready to take your first step towards homeownership? Start searching our database of new-build homes today and discover where your next chapter could begin. Start your search here.
